Having been listening to folk-metal for a while, I'd say its only folk cause of the use of traditional/folk-ish themes (mainly for the lyrics), i.e. ballads, legends, myths, often pagan, but not necessairily of the region where the band comes from, and some traditional instruments. Somehow the term "World Music" stuck to that arabic pop-clutter on BBC or Mama-Africa themes. Such a shame people rarely associate it with European Folk music.
Some bands only stick to guitars-bass-drums anyway, others, more "extreme" ones, like Turisas (Finnish) or In Extremo (German) are just a bunch of hairy men, dressed-up in furs and stained with fake blood, the latter playing some mad instruments like horns, bagpipes, drums of all kind, lutes and whatever else you may think of.
If you want listen to something non-metal, check out this song by Norwegian band Folque, they've been around since 70's, but already disbanded. Simle, but nice, lyrics are in Old-Norwegian, I believe, based on some sort of legend bout two sisters, love and murder, all that stuff.
http://warez.kindex.lv/Music.ftp/natashkin/1. Folque - Harpa.MP3
And more awesome stuff:
http://warez.kindex.lv/Music.ftp/Ulfhednar/Faun - Egil Saga.mp3
http://warez.kindex.lv/Music.ftp/Boghdan/Heresiarch - Elfwine.mp3
http://warez.kindex.lv/Music.ftp/Soljarka/Haggard - Herr Mannelig.mp3 (this one is a traditional theme, Ive heared some 3 versions of different bands)
More good bands:
http://www.varttina.com/
http://www.warsawvillageband.net/ (ealisy my all-time fav)
http://home.no.net/futhark/otyg/
http://www.cruachan.cjb.net/
http://www.silence.se/hedningarna/
http://www.garmarna.com/
Over and out.